Mahindra Systech to invest Rs350 cr on capacity expansion

New Delhi: Mahindra Systech, a division of $6.3-billion Mahindra group, on Friday said it will invest up to Rs350 crore this fiscal on capacity expansion and value addition of products in its auto component business.

“We will be spending in the range of Rs300-350 crore across Mahindra Systech for value addition in steel, stamping, forging and castings,” Mahindra Systech Sector president and M&M group management board member Hemant Luthra told reporters here on the sidelines of Automotive Component Manufacturers Association (ACMA) of India summit.

“The amount will be spent for value addition in steel, capacity expansion in stampings and for more machining in forging and casting,” he added.

The company, which garners about 50% of its revenues from exports to Europe, is upbeat about its prospects in the current fiscal.

“As compared to last year, India sales have picked up by 25-30%, while Europe is up 80-90%. So, I am very bullish about what is going to happen in second quarter,” Luthra said.

The company, which recently forayed into the aerospace business, has already announced investment of Rs 200 crore on a facility (Bangalore) to build aircraft components.

“We think demand will go up to a point, where we should not just be looking at Rs25-30 crore facility in India but maybe at Rs150-200 crore plant and that’s what we are doing,” Luthra said.

He said that the rising demand in aerospace sector led to distributors signing up in North America, Canada, Brazil and other places.

The company picked up 75.1% stake each in two Australian aerospace firms--Aerostaff Australia and general aircraft manufacturer Gippsland Aeronautics— for Rs175 crore in December 2009 and plans to make aircraft and allied components to service the global markets.